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Backed by Apple and Microsoft, Patent Troll Makes Money Off Android

After surviving the Nortel meltdown, Rockstar CEO John Veschi now controls about 4,000 of the company's patents.

Photo: Dan Krauss/WIRED

Some turn their noses up at Rockstar, a new kind of patent company backed by tech giants Apple and Microsoft. Rockstar's sole aim is to make money from the patent portfolio it inherited from bankrupt Canadian telecom Nortel, and in many Silicon Valley circles, that's a no-no.

But Rockstar, run by an ex-Nortel man, believes it has every right to make money from what it owns, and its efforts have proven successful. This past fall, hoping to accelerate its ambitions, Rockstar filed a patent infringement suit against a laundry list of big tech names, including Google, Samsung, and Chinese hardware giant Huawei, and now, it seems that Huawei has settled out of court, agreeing to pay Rockstar a licensing fee for the use of technologies inside its Android phones.

As you might expect, the motion did not specify how much Huawei has agreed to pay Rockstar. But the news still shows that patent trolling – where companies use their patents solely to make money from other companies – can be a viable moneymaker. There are signs, however, that the practice is getting more difficult.

>The news shows that patent trolling – where companies use their patents solely to make money from other companies – can be a lucrative business.

A consortium created by Apple, Microsoft, BlackBerry, and others, Rockstar purchased a large swath of patents from the bankrupt Nortel Networks in 2011, snatching them out from under Google, which had also placed a massive bid. As early as the spring of 2012, the company openly said that it would seek payments from any and all companies that infringed on its patents, and it's hardly surprising that Google would be on the list.

Other patent owners operate in similar ways, and they're typically called patent trolls. But Rockstar is a little different in that it's backed by Apple and Microsoft, two traditional rivals that rarely see eye-to-eye.

The Rockstar lawsuit is centered on Android operating system, which was created by Google and now runs across phones built by myriad partners. But so far, Huawei is the only one to settle. Intent on fighting the suit, Google recently filed a counter claim.

The web giant has long taken a stand against patent trolls, and it's not alone. Online retailer Newegg just won a major victory against a patent entity called Soverain Software.

Though Newegg's recent victory was offset by a ruling ordering the company to pay $2.3 million to a separate patent troll, it will appeal this decision, and as more companies fight these suits – and call for legal reform in the patent world – the trolling game will become that much more difficult.

But today, many companies still end up paying the trolls. Most of the other outfits sued by Soverain, for instance, are now forking over licensing fees to the company. At least for the moment, it pays to be a patent troll.